The business case for investing in decarbonization in food and agriculture value chains

As companies increasingly commit to reducing their Scope 3 emissions through Science Based Targets, investment in value chains decarbonization remains far below what is needed to achieve net zero by 2050. A staggering trillion-dollar financing gap continues to slow progress, with the food and agriculture sector receiving less than 5% of global climate finance. According to a Food and Land Use Coalition report (2024), an additional US$205 billion per year is required between 2025 and 2030 to meet the sector's climate mitigation goals—less than 2% of the sector’s projected US$13 trillion average annual revenue during the same period.

The cost of inaction is rising. Climate disruptions are expected to cause growing financial and operational challenges. Meanwhile, proactive measures can unlock new business opportunities. A joint CDP & HSBC report (2024) estimates that companies across sectors could unlock $165 billion in value by tackling climate risks in their value chains.

With up from 80% of most companies’ emissions taking place in the value chain, transparent disclosure and targeted reduction of Scope 3 emissions are quickly becoming a license to operate. Despite this, only 15% of companies in 2024 were directing their climate efforts toward their value chains. One of the biggest barriers? According to WBCSD’s business case report, building a compelling business case for investing in Scope 3 decarbonization in an uncertain policy landscape.

So, how then can companies build a robust business case for investing in decarbonization? The answer lies in a combination of meeting climate targets, generating financial savings and returns, building long-term resilience and seizing emerging market opportunities.

As more companies set Science Based Targets and pledge to reach Net Zero by 2050,  Scope 3 action is non-negotiable. Since these emissions represent the biggest share of total emissions, they are key to maintaining credibility with both customers and investors.

Collaboration across the value chain not only helps achieve climate targets, it strengthens business relationships and enables differentiation through low-emissions products.

Many value chain interventions offer direct cost benefits. Initiatives such as low-carbon energy generation, energy efficiency measures, and reduced input use are linked to cost cuts, with the former associated with 78% of all Scope 3 financial savings.

On-farm interventions like optimizing fertilizer use, not only cut costs but can also lead to increased yields. Improved system efficiency also contributes to lower operational costs across the value chain.

Meanwhile, the cost of inaction is rising. In 2023, a majority of the increases in UK food prices was linked to climate change-induced extreme weather events. Investing in mitigation measures today helps buffer against unpredictable climate-related costs tomorrow.

Due to the interconnected nature of value chains, collaboration is crucial to address Scope 3 emissions. Partnering with suppliers can boost long-term resilience in the value chain, reduce shared risks and costs, and scale innovation. It also secures a more reliable supply, especially as climate impacts worsen. Engaged suppliers benefit through securing trading relationships with leading companies and enhancing their market position by providing low-carbon goods.

Farmer buy-in is an important part of the puzzle in the food and agriculture sector. Many mitigation opportunities lie at the farm level, yet farmers often need to make upfront investments in infrastructure and change their practices, without sufficient financial resources. Regenerative agricultural practices offer long-term gains, greater yields, profitability and resilience due to less inputs and healthier soils. Downstream companies can help bridge this gap through co-investments models or price premiums.

Customers and investors are calling for more transparency and accountability. Demand is shifting toward sustainable companies – already 67% of consumers in Europe and the US support carbon labelling on food products.

Companies that delay action—or fail to substantiate climate claims—risk accusations of greenwashing. On the other hand, those taking timely, credible action can build trust, win customer loyalty, and gain market share in an increasingly sustainability-conscious marketplace.

A 2024 survey finds that most large institutional investors believe climate change is likely to affect the performance of investments in the next five years. Additionally, 77% of investors in North America and Europe view environmental, social and governance (ESG) integration as key to managing risks of unknown events. A 2025 South Pole report finds that investors are no longer waiting for regulations, they're actively seeking companies with credible climate risk management. Verified decarbonization metrics and credible climate transition plans increasingly translate into a lower risk profile and improved access to capital.

Investing in value chain decarbonization is not just a cost—it’s a gateway to new market opportunities. One emerging approach is the generation of transferable assets for Scope 3 emissions markets, which allows companies to co-finance interventions and share the burden of investment.

Innovative mechanisms like Impact Units enable companies to reduce the financial burden of decarbonization efforts while ensuring verified climate mitigation outcomes. By co-claiming these outcomes with partners in the value chain, companies can reap the benefits of investments by showing progress towards climate targets and meet customer and investor expectations on emission reductions.

Additionally, addressing Scope 3 emissions can open access to new markets for forward-looking companies who can differentiate themselves through low-carbon products. There is ample space for innovation in emerging markets from farm-level inputs to mid-manufacture products, driven by growing customer demand and the need to meet Science Based Targets.

While most of Scope 3 actions are currently voluntary, regulation is coming. New and upcoming regulations in the EU, California and other jurisdictions increasingly require Scope 3 disclosure. The CDP and HSBC report finds that emerging regulatory risks have the highest estimated financial impacts on companies in terms of Scope 3, including penalties for lack of compliance. By investing in innovation and scale, companies can stay ahead of the requirements and have a longer timeline to implement changes to procurement. This leads to fewer costs and operational disruptions when regulations come into force.

The lack of a consistent policy environment remains a challenge for many companies. They may fear competitive disadvantages due to increased costs when some companies invest in Scope 3 action and others do not. Furthermore, jurisdictional differences hinder action especially for big multinationals. This challenge can be alleviated by developing solutions collaboratively within the food and agriculture sector, enhancing consistency across the action companies are taking. Forums such as the Value Change Initiative bring companies together for this purpose.

Investing in decarbonization is a way for companies to futureproof their business. Scope 3 action is increasingly seen as critical for ensuring business continuity and maintaining a license to operate, rather than driving immediate financial returns. The emphasis is thus on safeguarding future operations in an evolving regulatory and environmental landscape.

Mapping and addressing risks and opportunities in Scope 3 action also enables risk mitigation. Companies in the food and agriculture sector are already noticing practical climate impacts in their value chains, with the supply of some commodities threatened or becoming more unpredictable. Investing in decarbonization is essential to safeguard future supply and should be a key factor feeding into the business strategy.

Investing in Scope 3 action is a no-regret move. While the returns may take time, the long-term business benefits—from resilience and innovation to enhanced reputation and market access—far outweigh the costs.

Emerging financing mechanisms and both public and private sector partnerships can help distribute costs and accelerate progress. Co-investing in verifiable mitigation outcomes with value chain partners is one such promising pathway – sharing costs through Impact Units can reduce the financial burden of emission reductions.

Ultimately, companies must shift their mindset. Scope 3 investments are not just compliance costs—they are strategic investments that safeguard the future, drive innovation, and build customer trust.

Investing in verified value chain interventions helps you futureproof your business.